Question

Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows: Jan. 1 Inventory 40 units @ $122 Mar. 10 Purchase 70 units $132 Aug. 30 Purchase 30 units $138 Dec. 12 Purchase 60 units @ $140 There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar, Cost of Merchandise Inventory and Cost of Merchandise Sold Inventory Method Merchandise Inventory Merchandise Sold First-in, first-out (FIFO) Last-in, first-out (LIFO) Weighted average cost

Answer 1

Answer

• Requirement

	Merchandise Inventory	Merchandise Sold
FIFO	$                11,160	$                15,500
LIFO	$                10,160	$                16,500
Weighted Average	$                10,664	$                15,996

• Workings

FIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	40	$              122.00	$                        4,880.00	40	$             122.00	$                 4,880.00	0	$              122.00	$                         -
Purchases:
10-Mar	70	$              132.00	$                        9,240.00	70	$             132.00	$                 9,240.00	0	$              132.00	$                         -
30-Aug	30	$              138.00	$                        4,140.00	10	$             138.00	$                 1,380.00	20	$             138.00	$            2,760.00
12-Dec	60	$              140.00	$                        8,400.00	0	$             140.00	$                              -	60	$              140.00	$            8,400.00
TOTAL	200		$                      26,660.00	120		$               15,500.00	80		$          11,160.00
LIFO	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	40	$              122.00	$                        4,880.00	0	$             122.00	$                              -	40	$              122.00	$            4,880.00
Purchases:
10-Mar	70	$              132.00	$                        9,240.00	30	$             132.00	$                 3,960.00	40	$              132.00	$            5,280.00
30-Aug	30	$              138.00	$                        4,140.00	30	$             138.00	$                 4,140.00	0	$              138.00	$                         -
12-Dec	60	$              140.00	$                        8,400.00	60	$             140.00	$                 8,400.00	0	$              140.00	$                         -
TOTAL	200		$                      26,660.00	120		$               16,500.00	80		$          10,160.00
Average Method	Cost of Goods available for sale			Cost of Goods Sold			Ending Inventory
	Units	Cost/unit	COG for sale	Units sold	Cost/unit	COGS	Units	Cost/unit	Ending inventory
Beginning Inventory	40	$              122.00	$                        4,880.00
Purchases:
10-Mar	70	$              132.00	$                        9,240.00
30-Aug	30	$              138.00	$                        4,140.00
12-Dec	60	$              140.00	$                        8,400.00
TOTAL	200	$            133.300	$                      26,660.00	120	$        133.3000	$               15,996.00	80	$          133.3000	$          10,664.00